First time home buyers repayment

Forum|Forum|5 years ago
March 15, 2021
1 reply
13 views

My client received the first time home buyers credit in 2008. Got divorced and gave the house to the ex-wife in 2015. The house was eventually lost in foreclosure after my client released it. I have been doing this client's return since 2018. Each year the return is e-file rejected due to this credit even tho I fill out the 5405. Problem is that the 5405 will not allow me to input a 2015 date. We have mailed in the return since 2018 but again this year it was rejected. How do I get this repayment to stop since the house foreclosed.

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T

TaxGuyBill

Level 15

@LauraK wrote:

How do I get this repayment to stop since the house foreclosed.

The foreclosure is treated as a sale, and you need to fill out Part 3 of the form.

L

LauraKAuthor

Level 2

He actually turned the house over to his wife with the divorce. She later lost the house in foreclosure.

T

TaxGuyBill

Level 15

If the house was officially transferred to the spouse, Form 5405 should have reported that in 2015 and the client should NOT have been making the repayment these last few years. That may be why the IRS has been rejecting the e-file, because he doesn't actually owe the repayment.

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